Seven Questions for HP Enterprise Chief Dave Donatelli
As the head of Hewlett-Packard’s newly created Enterprise Group, Dave Donatelli is one of those senior executives who has intermittently been “mentioned” as a candidate for the CEO job one day. In fact, when the job of running HP became open in 2010 when former CEO Mark Hurd abruptly resigned, Donatelli, along with Todd Bradley, head of HP’s consumer group, was generally considered a serious contender as a successor.
Of course, it didn’t play out that way. HP’s board of directors hired former SAP CEO Léo Apotheker in late 2010, beginning an ignominious 11-month reign that couldn’t seem to end soon enough, after an ill-fated attempt to spin off HP’s PC business was combined with the expensive acquisition of Autonomy.
The Enterprise Group, formerly the Enterprise, Servers, Storage and Networking unit that booked more than $22 billion in sales in 2011, is a recent creation of CEO Meg Whitman, who announced its creation in March and combined HP’s Global Sales organization under Donatelli.
I caught up with Donatelli in Las Vegas, where HP is holding its HP Discover event, at which it announced some product news on the storage front Monday. I asked him first to discuss the storage news in broad brushstrokes:
AllThingsD: The big announcement today was about storage. What’s the important message on that subject from HP that you want people to take away today?
Donatelli: Well, I think the top-level message is that with converged infrastructure, which is a strategy that HP has outlined, we’re out to reinvent the entire infrastructure industry. We’ve made major changes in the network industry, and we’ve done that over time. We’ve made major changes in servers, as with our recent announcement that we’re going to build servers with Intel Atom and ARM-based chips. It’s a total reinvention of what servers do. And then with storage, we think we’re doing the same thing. Most people look at storage as a pyramid with different tiers and different ways they address those tiers. Our competitors address those tiers with product after product, and the result is that to customers it becomes really complex and frustrating. What we’re doing with both backup and primary storage is taking what used to require multiple products and instead delivering one single product. With primary storage it’s 3PAR, and for backup, it’s a product called StoreOnce.
What makes these different from what has come before?
Both have some things in common. Both have new software architectures. They can learn a lot from the past, but they’re designed for the future. Our competitors are using old architectures. Our competitors are taking something that might have been designed for the old client-server or mainframe world and making them work in today’s world. That applies to just about everyone in the market. It’s the same thing in the backup world.
During your remarks you kept coming back to a phrase that made my ears perk up: “De-duplication.” I talked about this once with Prith Banerjee when he was running HP Labs. So how does it apply here?
Broadly speaking, people have backed up to tape since the beginning of time. And while tape always gets better, it is slow relative to disk, more error-prone than disk, and it could not keep up with the explosion in online data. When you’re creating more data all the time — and for compliance reasons, having to back it all up — you end up chasing something you can never change. The faster tape got, data would grow faster. Ideally, everyone always wanted to back up to disk, but as disk would come down in cost, tape would always come down in cost faster, so it was hard to justify. So then de-duplication came. And the best way to describe de-duplication is like this: Let’s say Mary creates a PowerPoint deck, and I really like it, so she sends me a copy, and then I forward it to you. Suddenly we have three copies. If you look across a company as big as HP, you’re looking at thousands of copies. Prior to de-duplication, the primary backup treated all those copies as if they were unique things. And then you’re doing a backup every night, and then another big backup every weekend, forever. So now, between the three of us, we have nine copies of that same PowerPoint deck by the end of the week, and it just goes and goes. So de-duplication uses algorithms to prevent all those extra copies from being made, and it is backed up once, and then every instance of it being used references back to that single copy. So where I had thousands of copies of that deck, I now have one. And these numbers will vary, but you can reduce the amount of data you have to store by 10 times, and there are cases where we’ve seen it reduced 70 times. And once you de-dupe, you can now afford to backup to disk and get rid of the tape.
So how do you see this fitting with the larger corporate mandate to simplify how HP engages with its customers?
I think it fits well within it. Our competitors sell products that sell a different product for each of the different ways to do backup and storage, and for each one there’s a lot to understand — like how they all work, how to service and support them and train people in how to use them. We’re saying that it’s only necessary to learn one product.
HP is broadly seen as trying to fix its IT services business, which is seen as being more profitable. So then the fundamental question becomes one of importance. HP has traditionally sold things — computer, servers, printers and so on. So, then, what’s more important now? Selling services or selling things?
I would start with the premise of your question. Because I think first and foremost … Meg has said that HP is an infrastructure company. This is not about transforming the company. That was the last regime. We’re making what we have work well. So, yes, we have services, and yes, it’s a way that some want to consume products, and our go-to-market has been very streamlined, but it doesn’t negate what we’re doing here at all. These are businesses, some of which, like storage, are growing faster than their markets.
Meg has talked about changing how things are done at HP, including moving senior executives like yourself out of their offices and out into cubicles. How is that different for you? Is it effective, and who do you see when you poke your head out of your cube?
I think Meg is trying to bring a team-based approach to HP. As a management team, I think we’ve spent more time together in the first few months than we have in a year, and I think that’s a positive thing. Todd [Bradley] sits right next to me, Cathie [Lesjak] sits next to Todd. Meg sits right next to Cathie. They’re about eight-foot cubes. It’s the first time I’ve been in a cubicle in about 20 years. I think the communication part of it is a good thing. Anything that promotes more communication is a good thing.
The business-critical service business, which sells the Itanium-based servers, has seen its sales drop in recent years. One could assume that this is the result of uncertainty brought on by the lawsuit with Oracle. Is that a business you think you can repair once the litigation gets resolved?
I think the litigation is very important to that business. We have U.S. litigation starting now, and then there is other litigation in other countries that is starting to play out. We believe we are very strong in our position. We believe not only that Oracle has a commitment to HP, but to our joint customers. We don’t want to see HP — or more importantly, our customers — left in the lurch. I think the results you’re talking about are not the result of litigation, but of Oracle’s unilateral decision not to support Itanium. Our belief is that a favorable outcome will help us there.